Energy and the Economy – Twelve Basic Principles

There is a standard view of energy and the economy that can briefly be summarized as follows: Economic growth can continue forever; we will learn to use less energy supplies; energy prices will rise; and the world will adapt. My view of how energy and the economy fit together is very different. It is based on the principle of reaching limits in a finite world. Let me explain the issues as I see them.

Twelve Basic Principles of Energy and the Economy

1. Economic models are no longer valid, as we start getting close to limits.

We live in a finite world. Because of this, the extraction of energy resources and of resources in general operates in a way that is not at all intuitive as we approach limits. Economists have put together models of how the economy can be expected to act based on how the economy acts when it is distant from limits. Unfortunately, these economic models are worse than useless as limits approach because modeled relationships no longer hold. For example:

(a) The assumption that oil prices will rise as the cost of extraction rises is not necessarily true. Instead, a finite world creates feedback loops that tend to keep oil prices too low because of its tight inter-connections with wages. We see this happening right now. The Telegraph reported recently, “Oil and gas company debt soars to danger levels to cover shortfall in cash.”

(b) The assumption that greater investment will lead to greater output becomes less and less true, as the easy to extract resources (including oil) become more depleted.

(c) The assumption that higher prices will lead to higher wages no longer holds, as the easy to extract resources (including oil) become more depleted.

(d) The assumption that substitution will be possible when there are shortages becomes less and less appropriate because of interconnections with the rest of the system. Particular problems include the huge investment required for such substitution, impacts on the financial system, and shortages developing simultaneously in many areas (oil, metals such as copper, rare earth metals, and fresh water, for example).

More information is available from my post, Why Standard Economic Models Don’t Work–Our Economy is a Network.

2. Energy and other physical resources are integral to the economy.

In order to make any type of goods suitable for human use, it takes resources of various sorts (often soil, water, wood, stones, metals, and/or petrochemicals), plus one or more forms of energy (human energy, animal energy, wind power, energy from flowing water, solar energy, burned wood or fossil fuels, and/or electricity).

Figure 1. Energy of various types is used to transform raw materials (that is resources) into finished products.

3. As we approach limits, diminishing returns leads to growing inefficiency in production, rather than growing efficiency.

As we use resources of any sort, we use the easiest (and cheapest) to extract first. This leads to a situation of diminishing returns. In other words, as more resources are extracted, extraction becomes increasingly expensive in terms of resources required, including human and other energy requirements. These diminishing returns do not diminish in a continuous slow way. Instead, there tends to be a steep rise in costs after a long period of slowly increasing costs, as limits are approached.

Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

One example of such steeply rising costs is the sharply rising cost of oil extraction since 2000 (about 12% per year for “upstream costs”). Another is the steep rise in costs that occurs when a community finds it must use desalination to obtain fresh water because deeper wells no longer work. Another example involves metals extraction. As the quality of the metal ore drops, the amount of waste material rises slowly at first, and then rapidly escalates as metal concentrations approaches 0%, as in Figure 2.

The sharp shift in the cost of extraction wreaks havoc with economic models based on a long period of very slowly rising costs. In a period of slowly rising costs, technological advances can easily offset the underlying rise in extraction costs, leading to falling total costs. Once limits are approached, technological advances can no longer completely offset underlying cost increases. The inflation-adjusted cost of extraction starts rising. The economy, in effect, starts becoming less and less efficient. This is in sharp contrast to lower costs and thus apparently greater efficiency experienced in earlier periods.

4. Energy consumption is integral to “holding our own” against other species.

All species reproduce in greater numbers than need to replace their parents. Natural selection determines which ones survive. Humans are part of this competition as well.

In the past 100,000 years, humans have been able to “win” this competition by harnessing external energy of various types–first burned biomass to cook food and keep warm, later trained dogs to help in hunting. The amount of energy harnessed by humans has grown over the years. The types of energy harnessed include human slaves, energy from animals of various sorts, solar energy, wind energy, water energy, burned wood and fossil fuels, and electricity from various sources.

Human population has soared, especially since the time fossil fuels began to be used, about 1800.

Figure 3. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and Wikipedia-World Population.

Even now, human population continues to grow (Figure 4), although the percentage rate of growth has slowed.

Figure 4. World population split between US, EU-27, and Japan, and the Rest of the World.

Because the world is finite, the greater use of resources by humans leads to lesser availability of resources by other species. There is evidence that the Sixth Mass Extinction of species started back in the days of hunter-gatherers, as their ability to use of fire to burn biomass and ability to train dogs to assist them in the hunt for food gave them an advantage over other species.

Also, because of the tight coupling of human population with growing energy consumption historically, even back to hunter-gatherer days, it is doubtful that decoupling of energy consumption and population growth can fully take place. Energy consumption is needed for such diverse tasks as growing food, producing fresh water, controlling microbes, and transporting goods.

5. We depend on a fragile self-organized economy that cannot be easily replaced. 

Individual humans acting on their own have very limited ability to extract and control resources, including energy resources. The only way such control can happen is through a self-organized economy that allows people, businesses, and governments to work together on common endeavors. Development of a self-organized economy started very early, as bands of hunter-gatherers learned to work together, perhaps over shared meals of cooked food. More complex economies grew up as additional functions were added. These economies have gradually merged together to form the huge international economy we have today, including international trade and international finance.

This networked economy has a tendency to grow, in part because human population tends to grow (Item 4 above), and in part because greater complexity is required to solve problems, as an economy grows. This networked economy gradually adds more businesses and consumers, each one making choices based on prices and regulations in place at the particular time.

Figure 5. Dome constructed using Leonardo Sticks

This networked economy is fragile. It can grow, but it cannot easily shrink, because the economy is constantly optimized for the circumstances at the time. As new products are developed (such as cars), support for prior approaches (such as horses, buggies and buggy whips) disappears. Systems designed for the current level of usage, such as oil pipelines or Internet infrastructure, cannot easily be changed to accommodate a much lower level of usage. This is the reason why the economy is illustrated as interconnected but hollow inside.

Another reason that the economy cannot shrink is because of the large amount of debt in place. If the economy shrinks, the number of debt defaults will soar, and many banks and insurance companies will find themselves in financial difficulty. Lack of banking and insurance services will adversely affect both local and international trade.

6. Limits of a finite world exert many pressures simultaneously on an economy. 

There are a number of ways an economy can reach a situation of inadequate resources for its population. While all of these may not happen at once, the combination makes the result worse than it otherwise would be.

a. Diminishing returns (that is, rising production costs as depletion sets in) for resources such as fresh water, metals, and fossil fuels.

b. Declining soil quality due to erosion, loss of mineral content, or increased soil salinity due to poor irrigation practices.

c. Rising population relative to the amount of arable land, fresh water, forest resources, mineral resources, and other resources available.

d. A need to use an increasing share of resources to combat pollution, related to resource extraction and use.

e. A need to use an increasing share of resources to maintain built infrastructure, such as roads, pipelines, electric grids, and schools.

f. A need to use an increasing share of resources to support government activities to support an increasingly complex society.

g. Declining availability of food that is traditionally hunted (such as fish, monkeys, and elephants), because an increase in human population leads to over-hunting and loss of habitat for other species.

7. Our current problems are worryingly similar to the problems experienced by earlier civilizations before they collapsed.

In the past, there have been civilizations that were confined to a limited area that grew for a while, and then collapsed once resource availability declined or population outgrew resources. Such issues led to a situation of diminishing returns, similar to the problems we are experiencing today. We know from studies of these prior civilizations how diminishing returns manifested themselves. These include:

(a) Reduced job availability and lower wages, especially for new workers joining the workforce.

(b) Spiking food costs.

(c) Growing demands on governments for services, because of (a) and (b).

(d) Greater disparities in wealth, as newer workers find it hard to get good-paying jobs.

(e) Declining ability of governments to collect sufficient taxes from common workers who are producing less and less (because of diminishing returns) and because of this, receiving lower wages.

(f) Increased reliance on debt.

(g) Increased likelihood of resource wars, as a group with inadequate resources tries to take resources from other groups.

(h) Eventual population decline. This occurred for two reasons: As wages dropped and needed taxes rose, workers found it increasingly difficult to obtain an adequate diet. As a result, they become more susceptible to epidemics and diseases. Greater involvement in resource wars also led to higher death rates.

When collapse came, it did not come all at once. Rather a long period of growth was succeeded by a period of stagnation, before a crisis period of several years took place.

Figure 6. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles.

We began an economic growth cycle back when we began using fossil fuels to a significant extent, starting about 1800. We began a stagflation period, at least in the industrialized economies, when oil prices began to spike in the 1970s. Less industrialized countries have been able to continue growth their growth pattern longer. Our situation is likely to differ from that of early civilizations, because early civilizations were not dependent on fossil fuels. Pre-collapse skills tended to be useful post-collapse, because there was no real change in energy sources. Loss of fossil fuels would considerably change the dynamic of the outcome, because most jobs would become obsolete.

Most models put together by economists assume that the conditions of the growth period, or the growth plus stagflation period, will continue forever. Such models miss turning points.

8. Modeling underlying the book Limits to Growth shows why depletion can be expected to lead to declining economic growth. It also shows why extracting all of the resources that seem to be available is likely to be impossible.

We also know from the analysis underlying the book The Limits to Growth (by Donella Meadows and others, published in 1972) that growing demand for resources because of Items listed as 6a to 6g above will take an increasingly large share of resources produced. This dynamic makes it very difficult to produce enough additional resources so that economic growth can continue. The authors report that the behavior mode of the modeled system is overshoot and collapse.

The 1972 analysis does not model the financial system, including debt and the repayment of debt with interest. The closest it comes to economic modeling is modeling industrial capital, which it describes as factories, machines, and other physical “stuff” needed to extract resources and produce goods. It finds that inability to produce enough industrial capital is likely to be a bottleneck far before resources in the ground are exhausted.

As an example in today’s world, there seems to be a huge amount of very heavy oil that can be steamed out of the ground in many places including Canada and Venezuela. (The existence of such heavy oil is one reason the ratio of oil reserves to oil production is high.) To actually get this oil out of the ground quickly would require a huge physical investment in a very short time frame. As a practical matter, we cannot ramp up all of the physical infrastructure needed (pipelines, steaming equipment, refining equipment) without badly cutting into the resources needed to “grow” the rest of the economy. A similar problem is likely to exist if we try to ramp up world oil and gas supply using fracking.

9. Our real concern should be collapse caused by reaching limits in many ways, not the slow decline reflected in a Hubbert Curve.

One reason for being concerned about collapse is the similarity of the problems our current economy is experiencing to those of prior economies that collapsed, as discussed in Item 7. Another reason for this concern is based on the observation from physics that an economy is a dissipative structure, just as a hurricanes is, and just as a human being is. Such dissipative structures have a finite lifetime.

Concern about future collapse is very different from concern that one or another resource will decline in a symmetric Hubbert curve. The view that resources such as oil will gradually decrease in availability once 50% of the resources have been extracted reflects a best-case scenario, where a perfect replacement (both cheap and abundant) replaces the item that is depleting, so that the economy is not affected. Hubbert illustrated the kind of situation he was envisioning with the following graphic:

Figure 7. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

10. There is a tight link between both oil consumption and total energy consumption and world economic growth. 

This tight link is evident from historical data:

Figure 8. Comparison of three-year average growth in world real GDP (based on USDA values in 2005$), oil supply and energy supply. Oil and energy supply are from BP Statistical Review of World Energy, 2014.

The link between energy and the economy comes both from the supply side and the demand side.

With respect to supply, it takes energy of many types to make goods and services of all types. This is discussed in Item 2 above.

With respect to demand,

(a) People who earn good wages (indirectly through the making of goods and services with energy products) can afford to buy products using energy.

(b) Because consumers pay taxes and buy goods and services, growth in demand from adequate wages flows through to governments and businesses as well.

(c) Higher wages enable higher debt, and higher debt also acts to increase demand.

(d) Increased demand increases the price of the resources needed to make the product with higher demand, making more of such resources economic to extract.

11. We need a growing supply of cheap energy to maintain economic growth.

This can be seen several ways.

(a) Today, all countries compete in a world economy. If a country’s economy uses an expensive source of energy (say high-priced oil or renewables) it must compete with other countries that use cheaper fuel sources (such as coal). The high price of energy puts the country with high-cost energy at a severe competitive disadvantage, pushing the economy toward economic contraction.

(b) Part of the world’s energy consumption comes from “free” energy from the sun. This solar energy is not evenly distributed: the warm areas of the world get considerably more than the cold areas of the world. The cold areas of the world are forced to compensate for this lack of free solar energy by building more substantial buildings and heating them more. They are also more inclined to use “closed in” transportation vehicles that are more costly than say, walking or using a bicycle.

Back in pre-fossil fuel days, the warm areas of the world predominated in economic development. The cold areas of the world “surged ahead” when their own forests ran short of the wood needed to provide the heat-energy they needed, and they learned to use coal instead. The knowledge they gained about using coal for home-heating quickly transferred to the ability to use coal to provide heat for industrial purposes. Since the warm areas of the world were not yet industrialized, the coal-using countries of the North were able to surge ahead economically. The advantage of the cold industrialized countries grew as they learned to use oil and natural gas. But once oil and natural gas became expensive, and industrialization spread around the world, the warm countries regained their advantage.

(c) Wages, (non-human) energy costs, and financing costs are all major contributors to the cost of producing goods and services. When energy costs rise, the rise in energy costs puts pressure both on wages and on interest rates (since interest rates determine financing costs), because businesses need to keep the total cost of goods and services close to “flat,” if consumers are to afford them. This occurs because wages do not rise as energy prices rise. In fact, pressure to keep the total cost of goods low creates pressure to reduce wages when oil prices are high (perhaps by sending manufacturing to a lower-cost country), just as it adds pressure to keep interest rates low.

(d) If we look at historical US data, wages have tended to rise strongly (in inflation-adjusted terms) when oil prices were less than $40 to $50 barrel, but have tended to stagnate above that oil price range.

Figure 9. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

12. Oil prices that are too low for producers should be a serious concern. Such low prices occur because oil becomes unaffordable. In the language of economists, oil demand drops too low. 

A common belief is that our concern should be oil prices that are too high, and thus strangle the economy. A much bigger concern should be that oil prices will fall too low, discouraging investment. Such low oil prices also encourage civil unrest in oil exporting nations, because the governments of these nations depend on tax revenue that is available when oil prices are high to balance their budgets.

It can easily be seen that high oil prices strangle the economies of oil importers. The salaries of consumers go “less far” in buying basics such as food (which is raised and transported using oil) and transportation to work. Higher costs for basics causes consumers cut back on discretionary expenditures, such as buying new more expensive homes, buying new cars, and going out to restaurants. These cutbacks by consumers lead to job layoffs in discretionary sectors and to falling home prices. Debt defaults are likely to rise as well, because laid-off workers have difficulty paying their loans. Our experience in the 2007-2009 period shows that these impacts quickly lead to severe recession and a drop in oil prices.

The issue we are now seeing is the reverse–too low oil prices for oil producers, including oil exporters. These low oil prices are contributing to the unrest we see in the Middle East. Low oil prices also contribute to Russia’s belligerence, since it needs high oil revenues to maintain its budget.

Conclusion

We seem now to be at risk in many ways of entering into the collapse scenario experienced by many civilizations before us.

One of areas of risk is that interest rates will rise, as the Quantitative Easing and Zero Interest Rate Policies held in place since 2008 erode. These ultra-low interest rates are needed to keep products affordable, since the high cost of oil (relative to consumer salaries) has not really gone away.

Another area of risk is an increase in debt defaults. One example occurs when student loan borrowers find it impossible to repay these loans on their meager wages. Another example is China with the financing of its big recent expansion by debt. A third example is the possibility that businesses extracting resources will find it impossible to repay loans with today’s (relatively) low commodity prices.

Another area of risk is natural disasters. It takes surpluses to deal with these disasters. As we reach limits, it becomes harder to mitigate the effects of a major hurricane or earthquake.

Clearly loss of oil production because of conflict in the Middle East or in other oil producing countries is a concern.

This list is by no means exhaustive. Many economies are “near the edge” now. Recent news is that Germany has slipped into recession as well as Japan. One economy failing is likely to pull others with it.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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962 Responses to Energy and the Economy – Twelve Basic Principles

  1. dolph9 says:

    I’ve been through so many “triage” like situations in my life, despite my comfort, so I suppose I’m not as nervous about the inevitable collapse.

    Rerun to the financial crisis. Suppose the central banks didn’t intervene. What would happen?

    Alright, we face a massive deflationary depression. 50% or more of banks shut down, world trade stops, energy production drops 50%. ATMs are closed, people can’t access their accounts. Stock and bond markets close. Governments are doing whatever they can to maintain order.

    Now, think through this for a second. Do you really think this is the end of humanity? That we all give up? I don’t think so. Anymore then it is the end if electricity stops or if a natural disaster comes through.

    What would happen on the ground is this:
    -Essential services like food, electricity, sewage would begin to operate on a command basis, or the government would just begin to directly employ people; yes there might be blackouts and long lines, but people would still line up for bread and water rather than starve
    -You might lose your job and ability to travel, but then jobs would be organized on a neighborhood by neighborhood level, with, again, essentials taking top priority
    -Meanwhile the public is restless to the politicians have to do something, so they begin to sort through the accounts of the banks and it’s discovered just how corrupt the system is; so lots of bankers are sent to jail or commit suicide or whatever; order has to be returned to the financial system, so most likely debt would be defaulted on, most everyone would take a substantial haircut on wealth; rather than creating new debt money, the government can just print money outright and distribute it on the basis of work, and then begin to guarantee the accounts of the remaining banks; after a few months the stock and debt markets can reopen, at much lower level and with higher interest rates
    -Big industries like finance, military, healthcare, entertainment etc. face heavy losses; bankers, actors, and soldiers have to find real jobs (the horror)
    -Yes there would be political dysfunction and chaos and war, but that’s true anyway
    -Once we drop a few rungs down, things begin to stabilize and people once again begin to find employment, but with less income; at least they have basic shelter because they haven’t been foreclosed on, and the criminals are either worm food or safely behind bars

    But you didn’t want that, right, you didn’t want to rip off the band aid. So instead you simply defer the pain to your children, the next generation.

    Ask anyone in chaotic, dysfunctional third world countries and they will tell you the lengths that people will go to survive. And the rising populations even in these countries proves the point that perfect, machine like operation simply isn’t needed for humanity to go on.

    • Paul says:

      Here’s a slightly more nuanced take on what might happen (see p. 56 onwards) if the global economy collapses — they use the EU as an example — however you could plug in any major economy and the result would be similar due to globalization

      http://www.feasta.org/wp-content/uploads/2012/06/Trade-Off1.pdf

      A command economy does not work without energy… in fact nothing except a very primitive economy will exist without energy sources that extend beyond animals pulling carts and plows

    • project wis.dom
      kesar says:

      I wish it was so simple. I really wish.

      The problem is that our system is working, because several subsystems work: agriculture, finance (currency is a part of this one), trade, telecommunication, transport, etc. Your scenario is based on the assumption, that all subsystems still work, but with decreased efficiency. I’m afraid this isn’t the case. Without oil all subsystems are hurt until they stop operating. Without currency people/companies don’t trade, without telecommunication government doesn’t administrate. This is like domino falling… one subsystem fails, all other follow.

  2. worldofhanuman
    worldofhanuman says:

    Paul, think about why now and why are specific regional blocks considering some form of autarchy. Specifically, non US/EU dependent electronic payment system within their countries and internationally (China has it already, Russia is working on it), also and more importantely why are scheming up those various barter like agreements for int trade in energy and industrial goods. That’s for me a clear sign, the old system is dying. I’m not sure what the new one will look like, how soon and long will be viable and able to operate, perhaps is ought to collapse soon afterwards. In any case let this image of rapidly changing todays world sink in. PS yes the reshuffle won’t be painless, especially in the “leisure” department be it cheap gas for individual motoring, cushy government jobs, and obscure entertainment, overflowing supermarkets with food and stuff. I guess the coming “autarchy project” can get few more decades out of this civilization, it will likely stink in the odours of cheap forced egalitarianism of the past, but people will be happy for a while, think about Diocletian reforms..

    • Paul says:

      EPS won’t exist without BAU — energy is everything… and the low hanging fruit is gone.

      They PTB will of course try to maintain their positions — I think they are delusional — just as delusional as those who think driving a Tesla will save the world.

      Even smart and wealthy people often believe in god — because god = hope…..

      So even smart and wealthy people are capable of believing that some sort of system can be developed that will soft land this sucker.

      I say no way jose…. there is no soft landing — we are so far beyond soft landing this it isnt even worth talking about.

      It is clearly obvious billions have to go — that is going to be a very mess landing…. and not even the powerful can assure they come out the back end of that alive…. and even if they do — if they think what comes next remotely resembles the now — I think they are dreaming.

  3. Paul says:

    For those having trouble with food budgets — we got pink slime…. but now we have something even better — real meat fresh from the fields and no doubt sewers of Cambodia… I hear that KFC will soon be introducing a value pack meal — the KFR Meal

    Cambodian rat meat: A growing export market

    A unique harvest is under way in the rice fields of Cambodia where tens of thousands of wild rats are being trapped alive each day to feed a growing export market for the meat of rural rodents.

    http://www.bbc.com/news/world-asia-28863315

    • Rodster says:

      I stopped eating at restaurants and fast food joints a long time ago. Too unsanitary and suspect food quality.

      • xabier says:

        Rodster

        In Britain one can dine out with confidence, because we reserve our most suspect food ingredients for the right places: schools and hospitals (where patients are known to die of thirst and malnutrition)!

  4. Paul says:

    Chris Hedges with a wake up call for the America lovers….

    How the Brutalized Become Brutal

    The horrific pictures of the beheading of American reporter James Foley, the images of executions of alleged collaborators in Gaza and the bullet-ridden bodies left behind in Iraq by the Islamic State of Iraq and the Levant are the end of a story, not the beginning. They are the result of years, at times decades, of the random violence, brutal repression and collective humiliation the United States has inflicted on others.

    Our terror is delivered to the wretched of the earth with industrial weapons. It is, to us, invisible. We do not stand over the decapitated and eviscerated bodies left behind on city and village streets by our missiles, drones and fighter jets. We do not listen to the wails and shrieks of parents embracing the shattered bodies of their children. We do not see the survivors of air attacks bury their mothers, fathers, brothers and sisters. We are not conscious of the long night of collective humiliation, repression and powerlessness that characterizes existence in Israel’s occupied territories, Iraq and Afghanistan. We do not see the boiling anger that war and injustice turn into a caldron of hate over time. We are not aware of the very natural lust for revenge against those who carry out or symbolize this oppression. We see only the final pyrotechnics of terror, the shocking moment when the rage erupts into an inchoate fury and the murder of innocents. And, willfully ignorant, we do not understand our own complicity. We self-righteously condemn the killers as subhuman savages who deserve more of the violence that created them. This is a recipe for endless terror.

    Chaim Engel, who took part in the uprising at the Nazis’ Sobibor death camp in Poland, described what happened when he obtained a knife and confronted a German in an office. The act he carried out was no less brutal than the beheading of Foley or the executions in Gaza. Isolated from the reality he and the other inmates endured at the camp, his act was savage. Set against the backdrop of the extermination camp it was understandable.

    “It’s not a decision,” Engel said. “You just react, instinctively you react to that, and I figured, ‘Let us to do, and go and do it.’ And I went. I went with the man in the office, and we killed this German. With every jab, I said, ‘That is for my father, for my mother, for all these people, all the Jews you killed.’ ”

    Any good cop, like any good reporter, knows that every criminal has a story. No one, except for perhaps a few psychopaths, wakes up wanting to cut off another person’s head. Murder and other violent crimes almost always grow out of years of abuse of some kind suffered by the perpetrator. Even the most “civilized” among us are not immune to dehumanization.

    The enemies on the modern battlefield seem elusive because death is usually delivered by industrial weapons such as aerial drones or fighter jets that are impersonal, or by insurgent forces that leave behind roadside bombs or booby traps or carry out hit-and-run ambushes. This elusiveness is the curse of modern warfare. The inability of Sunni fighters in Iraq to strike back at jets and drones has resulted in their striking a captured journalist and Shiite and Kurdish civilians.

    U.S. soldiers and Marines in the occupations of Iraq and Afghanistan, and Israeli soldiers in assaults on Gaza, have been among those who committed senseless acts of murder. They routinely have gunned down unarmed civilians to revenge killings of members of their units. This is a reaction I saw in several wars. It is not rational. Those murdered were not responsible, even indirectly, for the deaths of their killers’ comrades, just as Foley and the Shiites and Kurds executed in Iraq were not responsible for the deaths of Sunni militants hit by the U.S. Air Force.

    J. Glenn Gray, who fought in World War II, wrote about the peculiar nature of vengeance in “The Warriors: Reflections on Men in Battle”:

    When the soldier has lost a comrade to this enemy or possibly had his family destroyed by them through bombings or through political atrocities, so frequently the case in World War II, his anger and resentment deepen into hatred. Then the war for him takes on the character of a vendetta. Until he has himself destroyed as many of the enemy as possible, his lust for vengeance can hardly be appeased. I have known soldiers who were avid to exterminate every last one of the enemy, so fierce was their hatred. Such soldiers took great delight in hearing or reading of mass destruction through bombings. Anyone who has known or been a soldier of this kind is aware of how hatred penetrates every fiber of his being. His reason for living is to seek revenge; not an eye for an eye and a tooth for a tooth, but a tenfold retaliation.

    Those killed are not, to the killers, human beings but representations of what they fear and hate. The veneer of the victim’s humanity, they believe, is only a mask for an evil force. The drive for vengeance, for “tenfold retaliation,” among those who are deformed by violence cannot be satiated without rivers of blood—even innocent blood. And Americans do as much of this type of revenge killing as those we fight. Our instruments of war allow us to kill from a distance. We therefore often lack any real consciousness of killing. But this does not make us any less depraved.

    Read the rest here http://www.truthdig.com/report/page2/how_the_brutalized_become_brutal_20140824

    • Paul says:

      Keep in mind when reading this, Chris Hedges is an American…. and he is a Pulitzer Prize winning war correspondent who worked for the NY Times for years….

      He is not some armchair QB sitting in Alaska or wherever else — watching CNN — and buying the John Wayne PR spin — and telling us about how good America is…. he has been there — he has seen the carnage that his country visits on the world…

    • xabier says:

      To some extent very true: but also, utter tosh, it all depends on the exact circumstances: the ‘outraged Muslim’ who murdered poor Foley in such a cowardly way was not brought up under the heel of US oppression, with drones taking out his kith and kin, but in dreary old, damp, London with welfare to keep him if needed. The ETA murderers in Spain like to call themselves ‘avengers of oppression’ – it makes them feel good, but it is a lie.

      • Paul says:

        Of course we can never know what the motives of each individual are….

        However the fact of the matter is — and I have traveled extensively and discussed this issue with many Muslims — the US is reviled across the board.

        Even in Malaysia — a very moderate modern country – I put this question to some very educated business people and the comments I summarize as follows:

        “No of course we would never engage in acts of violence against the US — but we completely understand why many Muslims do”

        Time after time after time after time I have heard the same sentiments from Egypt to Bahrain to Yemen….

        Now could it be as Bush said ‘they hate us for our way of life’ — or could it be as Hedges says ‘they hate us for what we do to them’

        Note that Foley also blames America for his own death.

  5. Don Stewart says:

    Dear Gail and All

    Here is another angle on the question of the value of gardening. The first article reports on a recent scientific paper speculating that a significant part of human eating behavior is, in fact, strongly influenced by our gut bacteria. The second article is an excerpt from George Mateljan’s weekly bulletin on food, and explains how the artificial environments industrial agriculture creates result in less nutritious food.

    I have made the point that we eat for two broadly different reasons. First, of course, we simply need calories for energy. Most people in the world today get an excess of calories from staple crops such as the grains which supply 80 percent of the world’s calories. Excess weight is now a greater problem, worldwide, than too few calories. The second reason is health…and this is where the products of gardening are spotlighted. If you want a healthy gut biome then you have to eat plenty of low-calorie density plants, and if you want your body proper to be able to mount effective defenses against disease, you have to eat plenty of low-calorie density plants.

    Furthermore, the plants need to be bred and grown under conditions conducive to the development of their own protective capabilities…as opposed to the hot house pampering that produces cosmetically beautiful tomatoes with lots of water content.

    And, most recently, we are relearning the lesson that the gut bacteria are, in some senses, in charge. I remember a joke from 40 years ago: We don’t have to worry about the future of the human race, so long as the bacteria find us useful.

    My conclusion is that those who have learned how to garden high nutrient density plants are likely to be better off in a collapse than those who are dependent on industrial agriculture’s cosmetic, but nutrient challenged, wonders.

    Don Stewart
    PS Nutrient density is also related to the question of cooking. Some plants become more nutrient dense for humans when cooked, but others are best eaten raw. Some doctors recommend that half your veggies be cooked, and half eaten raw. If your veggies are coming from your own garden which is managed for low inputs, and if you are only cooking half of them for the briefest period of time, then you are minimizing cooking fuel. Geoff Lawton grows a variety of sweet potatoes which cook quickly to conserve cooking fuel…which may be just slightly over the line into obsession.

    http://indianexpress.com/article/india/education/our-microbiome-may-just-be-looking-out-for-itself/
    (This article appears also in the New York Times, but the NYT has a paywall)

    From George Mateljan:
    Recent studies, however, are finding even more significant results when measuring nutrients such as beneficial flavonoids in organically grown produce. Such was the case in a recent study by researchers at the University of California-Davis and the University of Minnesota, who analyzed the levels of two highly beneficial flavonoid-type antioxidants – quercetin and kaempferol – in dried tomatoes (Mitchell AE et al 2007). Flavonoids are polyphenols with not only antioxidant, but anti-viral, anti-inflammatory, anti-cancer, anti-diabetic, anti-allergy, anti-anxiety, anti-osteoporotic, and cardioprotective effects . They occur in virtually all plant foods and are associated, as one would expect from all their beneficial actions, with a range of preventive health benefits. Mitchell et al. found that certified organic tomatoes contained 79% more quercitin and 97% morekaempferol, compared with tomatoes grown by conventional methods!

    The reasons explaining these results may at first seem counter-intuitive. Conventional farming practices have long used pesticides to protect plants from pests and have heavily doused them with inorganic nitrogen-rich fertilizers to enhance growth. The irony is that over-protection of the plants prevents them from producing their own natural protection against pests and infections, and inorganic fertilizers do not replenish trace minerals, which become depleted in our soils. Flavonoids are plants’ own internally produced protection system against pests. While we think of them as a healthy addition to our meals to help protect us against disease, we don’t often remember that they actually do the same thing for the plants that supply them for us.

    Researchers have found that levels of flavonoids in the organically grown plants actually increased over time as soil levels of nitrogen compounds decreased – when they became in a sense, more nutrient-deficient!

    Researchers at Kansas State University reported similar results in 2005 when organic farming produced higher levels of flavonoid antioxidants as a result of the crops. increased vulnerability to insect attack. The over use of conventional fertilizers, which are high in nitrogen content, also results in a greater uptake of water and has been hypothesized to dilute the flavor of conventionally grown produce as well.

  6. theedrich – Tacoma, Washington, USA – Philosopher.
    theedrich says:

    While Texan oil production seems to be on a roll for now, the Bakken appears to be headed for a peak in 2016.  However, outside the U.S., things do not look so rosy.  The Mohammedanist forces are anything but on the run;  Libya, Syria and Iraq are in chaos, all caused ultimately by contorted U.S. interventionism.  Egypt’s economy is flat on its back.  Ukraine is threatened by partial takeover by the new Tsarist state of Russia.  Meanwhile the current U.S. regime is mainly interested in inventing excuses as to why it is in a stalemating stupor but should nonetheless be re-elected in the next two elections — all as it makes ample use of the race card to distract from its failures.  Afghanistan, as things look now, will quickly revert to Taliban control after American troops have left at the end of this year.  That will be followed by another wave of a million or so refugees seeking asylum in the U.S. and Europe.  If Israel and/or the U.S. destroy Iranian nuclear facilities, Tehran will instantly close the Strait of Hormuz (anciently, of Ahura Mazda, the “Wise Lord”), bringing the world economy to a screeching halt.  Never mind BRIC attempts to create an alternative to the dollar as the world’s reserve currency.

    Of all of this the average American is blissfully unaware.  But it will only take a single one of the above-mentioned (among many other) factors to break some or other weakest link in the chain (Liebig’s law) of the world economy, and Humpty Dumpty will have a great fall.

  7. equipmentru – ВАМ КАК КЛИЕНТУ ПРЕДОСТАВЛЯЕТСЯ ВОЗМОЖНОСТЬ ПОЛУЧИТЬ ВСЕ НЕОБХОДИМОЕ В ОДНОМ МЕСТЕ. КРОМЕ ТОГО, НАША КОМПАНИЯ ТАКЖЕ ЯВЛЯЕТСЯ ПРОИЗВОДИТЕЛЕМ БЕТОННЫХ КАМНЕЙ И БЛОКОВ. БЛАГОДАРЯ НАКОПЛЕННОМУ ОПЫТУ, МЫ МОЖЕМ ОТВЕТИТЬ НА ВСЕ ВАШИ ВОПРОСЫ НЕ ТОЛЬКО КАК ПОКУПАТЕЛЬ, НО И КАК ПОЛЬЗОВИТЕЛИ ОБОРУДОВАНИЯ. ЗА КОРОТКИЙ СРОК КОМПАНИИ УДАЛОСЬ ВЫЙТИ НА МЕЖДУНАРОДНЫЙ РЫНОК И НАША ПРОДУКЦИЯ ДАЕТ НАМ ПРАВО ГОРДИТСЯ СВОИМ ВКЛАДОМ В ЭКОНОМИКУ СТРАНЫ.
    equipmentru says:

    Good post!

  8. Natural resources depletion everywhere you look. Wonder what will happen when every countries in the world will become a net importer of oil.

    I like that last sentence .

    While the profit results were in line with the company’s previous forecasts, it has moved to further reduce costs after already slashing hundreds of jobs by shutting down its Kurnell oil refinery in Sydney and turning it into an import terminal.

    https://au.finance.yahoo.com/news/caltex-cut-350-jobs-amid-012152891.html

    =====================================================================
    Caltex to cut 350 jobs amid tepid profit growth

    Petroleum company Caltex has announced it is axing 350 jobs to cut costs amid tepid profit growth.

    Caltex says the majority of the jobs will be shed in the next 12 months, in response to a company-wide review of costs and efficiency.

    Without specifying specific areas or locations, the fuel company says the job cuts will affect operational and support positions.

    The cuts have been revealed at the same time as Caltex has reported a fall in first-half profit.

    Caltex has posted a net profit after tax of $163 million for the six months to June, down from $195 million in the prior year.

    The firm’s preferred measure (“replacement cost of sales operating profit”), which adjusts for inventory changes, rose 1 per cent to $173 million.

    While the profit results were in line with the company’s previous forecasts, it has moved to further reduce costs after already slashing hundreds of jobs by shutting down its Kurnell oil refinery in Sydney and turning it into an import terminal.

  9. Ed – I am interested in energy issues.
    edpell says:

    Growth is always limited. The limits of a finite world impose themselves. If we do nothing, if we never plan, never think about it the physics of the situation will take acre of limiting growth. We can use thoughtful and well planned means like permaculture/biology based sustenance production, sustainable energy forms of whatever level of usefulness but this can only change the maximum number of people sustainable.

    NOTHING we do can allow infinite growth. Even at 2% growth per generation the mass of humans even if a solid sphere would have to expand faster than the speed of light to accommodate the growth after only 60,000 years.

    Our choices are what mechanism will be used to limit the human population to a fixed number.

    1) do nothing and accept the four horsemen
    2) limit the number conceived by allowing only two per couple
    3) limit the number conceived by allowing only some to reproduce
    4) a mixture of #2 and #3

    We also have the choice of using one of the above in some geographic areas and a different one in other geographic areas. Likewise one of the above applied to some economic, religious, political, self promotion group and different ones applied to different groups.

    I go for the some sane country applying the following.
    1) close borders
    2) every citizen can have two children
    3) welfare money is given only to citizen who agree to have themselves and their under aged children irreversibly sterilized
    4) as this will not produce enough children to maintain the population (some will choose not to have kids, some will get run over by a bus before having kids, etc) some set of standards be developed based on health and intelligence. If one passes the test then one is entered, if one wishes, into a lottery. The lottery (random chance) selects enough couples to reach the need replacement level. Winner may have up to four children total and receive some modest level of social support for the extra kids.
    5) maintain a strong national technical means to stop any outside group that
    a) seeks to take the land and water of nation
    b) pollutes in a way that damages the nation (i.e. common air, common oceans).

  10. dolph9 says:

    It should be repeated here, by the way, that if you argue for bailouts you are not arguing for capitalism, you are arguing for socialism.

    So those of us who say no bailouts are the true capitalists, and those who say yes to bailouts are the true socialists. Just to put that on the record and get the terms straight.

    And I’m no free market fundamentalist, but it’s important that we don’t let the bailout crowd confuse the issue, and say they are in favor of free markets, and price discovery, because they aren’t. They are in favor of government intervention and socialized costs.

    Don’t let them take the high ground!

    • Christian Gebauer
      Christian says:

      Dolph

      Quite bizarre your view on socialism. I’ve always thought socialists rather hated banks, I can’t imagine Lenin saving Lehmans…

      As I see it, what you call socialism is the real capitalism, and what you call capitalism had never existed, just perhaps in some books

    • Paul says:

      Capitalism? No such thing.

      Free markets? No such thing.

      You can take the high road and argue against bail outs – QE ZIRP etc…. but you will be in the ditch eating dog food warmed over plastic bags the moment these policies stop.

      The only thing that is keeping us from a massive deflationary spiral is stimulus spending — ghost cities in china – subprime auto loans in the US — property boosts in the US and UK — etc etc etc….

      Not only the wealthy are benefiting from this stimulus — we all are… because this is the only ‘growth’ that is happening — take away stimulus — and we are done

      • B9K9 says:

        Besides myself, you seem to truly be the only other person who really “gets it”.

        However, the primary difference between you and I is that you, for some reason, associate yourself with the commoners, the losers. Why is that? What have these people done to deserve your respect, sympathy & support?

        The winners are always ahead of the curve. Millions of disenfranchised tenants advocating for land reform? Why, turn them all into “owners” via loans created by banks controlled by the vast land barons.

        Peak oil dooming the 150-200 year run of an economic system (which they created based on opportunities afforded to replace force majeure) dependent on perpetual growth? Why, begin a nascent full spectrum surveillance system, combined with 24/7 propaganda, delivered by the ability to (temporarily) print money out of thin air.

        What does it gain you repeatedly pointing out the obvious? Does it inflate your ego helping others who are just stumbling into the harsh light of reality? Perhaps you’re just a stage away from full acceptance. As for me, I smile to myself at every turn of the screw, saying to myself: “well played, well played”.

        The real intrigue is to correctly predict each event, whether it’s the false flag that allows US/NATO to use all available means to topple Russia, implement the next restriction of civil liberties, or finally begin the process of informing the retards that the jig is up, and that rationing, price controls, etc are just the beginning of the new world order.

        • Paul says:

          BK…. I am interested in only in truths…. in understanding what is really going on … kinda like doing Sudoku … or Rubic’s Cube … or Chess…

          As you can see it irritates me to see people mouthing CNN talking points particularly because I come to this site to understand the nature of the problem we are facing — and the commentary on that issue is generally very high level.

          Funny how people can see through the spin on the energy level but they can still believe America is the good guy….

          I am not searching for the good guy … there is no good guy … only interests…

          I do not admire those who ‘turn the screws’ —- rather when I see what is really happening it reinforces my conclusion is that we are a vile species…

          And that the sooner we extinct ourselves — the better.

        • xabier says:

          B9K9

          When you think that you are about the only one to get it, then I would suggest it’s time to reflect and show a little humility.

          I remember a chap at art school who insisted on placing his easel next to mine: his work was dreadful. But that didn’t stop him leaning across and whispering ‘These others are useless: only you and I can paint!’

  11. Rodster says:

    “Danger to food chain? Microplastic contaminates found in Sydney Harbor”
    http://rt.com/news/182500-environment-ocean-contaminated-microplastic/?utm_source=browser&utm_medium=aplication_chrome&utm_campaign=chrome

    Scientists in the first study of its kind have found microplastic contamination at the bottom of Sydney Harbor, which may pose a threat to the food chain, Australian media reported. The research by the Sydney Institute of Marine Science tested 27 sites across the harbor, with researchers finding up to 60 microplastics per 100 milligrams of sediment. This was a higher volume than expected even in the cleanest and best-flushed reaches.

    • xabier says:

      Rodster

      The first Truly Global Civilization: which then proceeds to, as it were, put a plastic bag over its head and draw it tight……..

  12. KZ says:

    People believing in economic doomsday scenarios, are always saying that the doomsday is just a couple of months away. They’ve been wrong for many years. Why should I start believing them now, when they’ve already proven numerous times that their “predictions” are worthless, based on nothing but wishful thinking and clever tricks to sell prepper books, precious metals, survivalist supplies and cryptocurrencies?

    Banks can collapse and oil can be depleted.
    Work will still get done.
    People will still have jobs and exchange goods and services.

    People are adaptable. They innovate. They find solutions to their problems. They always have, and they always will. Knowhow, technical skills and the power of innovation doesn’t suddenly disappear just because oil is slowly depleting, banks are failing or unemployment numbers are rising.

  13. wadosy says:

    peak oil sites like theoildrum came out of nowhere, the logic and facts of peak oil went viral, and the price of oil got way out of hand

    luckily, the big money boys had prepared a device to control oil prices –they’d been selling houses to people who couldnt afford anything but a bicycle and a cat and the big money boys plastered the US with ditech commercials 24/7, encouraging the bicycle/cat people to refinance their mortgages to get some cash…

    the big money boys packaged these bad loans and peddled them globally –professional money people making bad loans and peddling them everywhere.. this behavior doesnt make sense– professional money people making bad loans then selling hem everywhiere… they surely knew better

    .
    but it was an experiment –faced with the certanty of peak oil, the big moneys boys needed to know how high the price of oil could go before economies started imploding… and when it got high enough, they popped the housing bubble to calm everything down

    the price of oil overshot on the downside, way lower than was necessary for the fracking the fracking being the next big selling point for peak oil denial, but nevermind… the price of oil soon recovered to the point where fracking was at least marginally profitable

    so now peak oil is dead, the US will be energy independent and even have enough to export energy to replace rkussian gas, which is politically incorrect

    and now everything’s just fine and dandy

  14. KZ says:

    People believing in economic doomsday scenarios, are always saying that the doomsday is just a couple of months away. They’ve been wrong for many years. Why should I start believing them now, when they’ve already proven numerous times that their “predictions” are worthless, based on nothing but wishful thinking and clever tricks to sell prepper books, precious metals, survivalist supplies and cryptocurrencies?

    Banks can collapse and oil can be depleted.
    Work will still get done.
    People will still have jobs and exchange goods and services.

    People are adaptable. They innovate. They find solutions to their problems. They always have, and they always will. Knowhow, technical skills and the power of innovation doesn’t suddenly disappear just because oil is slowly depleting, banks are failing or unemployment numbers are rising.

  15. Christian Gebauer
    Christian says:

    A very short piece called The End of the World is Coming appeared on a Buenos Aires newpaper today. It pretends to be humorous but didn’t got much readings and not a single comment… I didn’t commented neither, while it says it all plainly: “Stephen Hawking anticipates that, if we don’t runaway soon from this hipersaturated planet, the developpment of the productive forces within the capitalism we’ve built up will erase all possible sources for survival”.

    What do you say Xabier, is it possible something like that to appear in say the Guardian?

    http://www.perfil.com/contenidos/2014/08/23/noticia_0007.html

    • xabier says:

      Christian

      Nice pithy article. No, the UK press is full of trivia: the Guardian, once a very serious newspaper informed by high ideals, is nothing much more than a comic book these days, and the same is true even for the so-called ‘conservative’ press. It’s all about click-rates….

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      That is a pretty long list. Maybe there is hope that humans will continue, regardless of what happens to the oil and electricity users.

    • xabier says:

      tfouto

      Thanks: good luck to them. Although some seem to be trying to finish one another off…..

  16. Jarle B says:

    InAlaska wrote:
    “You guys, while clearly intelligent, are so anti-American that you sabotage your own arguments by being so lefty-extreme.”

    What’s up with Americans naming people they disagree with “lefty-extreme”?

  17. Siobhan says:

    ‘Belgian Buyer’ of Treasuries Is BIS, Rothchild Backdoor Money Laundering
    http://winteractionables.com/?p=13797

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Interesting hypothesis, suggesting that laundering illegal money that the BIS gets access to is behind the Belgian Buyer.

      I notice that the post includes a chart someone else produced suggesting five possible buyers, with each buyer using “off balance sheet swaps” to fund the transactions. I don’t understand how such an approach would generate enough funds. If such funding did work, it presumably could also be used by BIS.

  18. MJx says:

    UK aging oil platforms at risk to closure due to depletion:
    http://finance.yahoo.com/news/uk-oil-output-threatened-platforms-124400627.html
    LONDON (Reuters) – Britain’s oil industry is facing the threat of a cascade of North Sea rig closures, unless ageing platforms can urgently source more gas to help squeeze out the remaining barrels.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Problems like lack of gas for power could put an end to drilling. Building pipelines that are going to be used for a few years at most may not be economic. The reason drilling stops is for economic reasons–not because there isn’t still oil left.

  19. Paul says:

    The World’s Most Dangerous Room

    Three years after the tsunami hit, the nuclear catastrophe at Fukushima is barely contained. “So much radiation still pulses inside the crippled reactor cores that no one has been able to get close enough to survey the full extent of the destruction.” What lessons has Japan learned? Not enough. “No one has gone to jail, and no one wants to take responsibility. Everyone still wants to look the other way”

    http://time.com/worlds-most-dangerous-room/

  20. Rodster says:

    A news article on oilprice.com says by 2040 that China will need 3 times the amount of energy to support it’s economy. Supposedly they have over 1 Trillion of shale energy they could try and extract but their extraction technology is not to current standards as other developed nations such as the US and EU. So they are looking for outside help. Can you imagine what China will do to the rest of their environment by fracking? These are the same guys who build 9 story garbage mountains in residential areas.

    http://oilprice.com/Energy/Natural-Gas/Chinas-Natural-Gas-Demand-Set-to-Triple-by-2040.html

    I guess peak oil is a myth huh?

    • InAlaska says:

      Rodster, that need for energy is based on the assumption that the Chinese economy will continue to grow for the next 25 years in the same trajectory as it has in the last 25 years. Since this cannot happen, the article is kind of pointless.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Countries have to look at what in theory they can do–whether or not there is any real possibility of these things happening.

  21. Pingback: CFS News-Views Digest No. 63 (8-22-14) | Citizens for Sustainability

  22. Don Stewart says:

    Dear Gail and All
    A dispute about the future of Permaculture has broken out in the New York Times and other places. One place to start is this article:

    http://www.resilience.org/stories/2014-08-22/understanding-economies-of-scale

    ‘homestead to small commercial scale agricultural production is a huge financial challenge. Can it be done profitably? Sure, people do it, but permaculture is chronically capital starved.’

    There are approximately a billion variables which influence the effectiveness of a permaculture design. I’ll try to simplify things a little. If anyone looks at the Permaculture Principles, it’s pretty hard to argue with them, unless you are a cornucopian. They are about living a good life in a World of Limits. But the exact nature of the Limits is uncertain, and the Limits will change over time. For example, this past summer there was another algal bloom on Lake Erie which shut down the Toledo, Ohio water supply. One of the causes is the huge factory feedlots which dump phosphorus into the water. Permaculture doesn’t use huge factory feedlots dumping phosphorus into the water. But the entire social and political structure in this country and most other countries around the world overwhelmingly favors the feedlots.

    So I think we can reasonably assume that animal operations which follow the Permaculture Principles are not going to grow large enough to please Frank Aragona and begin to compete in the capital markets with the likes of Tyson Foods. But, Gail would object, over the next months or years there will be a financial crisis and the oil which sustains those massive feedlots will disappear. So we might conclude that animal operations consistent with Permaculture Principles may be feasible in the future, but will always be restricted to niches in the summer of 2014.

    Economies, just like organisms, must evolve. And one of the principles of evolution is that sometimes Nature just can’t figure out a way to evolve from Point A to Point B. So it is entirely possible that there is no realistic way to evolve from CAFOs to permaculture. Which leaves us with a Kunstler scenario: collapse followed by rediscovery of old ways and new inventions.

    Because there are a billion factors which have an influence on the success of a permaculture design, and since the design must necessarily be partly about an uncertain future, it is very easy for bystanders to take potshots…but you didn’t think about Factor 999,542,678, which renders your design useless…but your assumption of energy shortages is all wrong because nuclear is going to save us…but you aren’t feeding the 9 billion…but the real problem in the future will be lack of workers, as the population crashes with the Four Horsemen…and so on and so forth.

    My conclusion, back around 2006, was that gardening makes the most sense for most of us. The garden can include small animals such as worms and rabbits and chickens, but not herds of cattle or hundreds of acres of grains. The garden is mostly used for food that we eat ourselves, or trade with close neighbors. It might also support a cottage industry such as medicinals. The garden is operated in one’s spare time, unless one is retired or unemployed, in which case a larger garden can be managed.

    I think it is important that, over time, the gardener become more and more skilled in gardening with few external inputs…because I am concerned about the potential for an economic collapse. Whether the particular biological farming and gardening method used is called permaculture, natural farming, biointensive production, biodynamics, or something else is largely irrelevant.

    Let’s consider two collapse scenarios in which gardening might be a really handy skill to have. First, consider Cuba. When Cuba collapsed the government agreed to provide every citizen a ration of staple crops. But the citizens were left on their own to acquire the sort of things grown in gardens. The citizens of Cuba today have more than enough calories in their diets, at least partly due to this twofold strategy. If the collapse of the US follows a similar trajectory, then obviously gardening would be a handy skill to have.

    Second, staples are usually dried before they are shipped. Consequently, they can be shipped economically without refrigeration and can be stored for years. If there is any transportation left at all after a collapse, the transport of staple food crops is likely to get high priority. A ration or purchase of the staples combined with the production of garden crops may very well be important. We should keep in mind that staples are about calories, while garden crops are about health…with the phytonutrients supplying critical information to our bodies.

    But suppose that ALL long distance transport disappears, and we are limited to what can be hauled by the few mules we happen to have kept? Then, I submit, we are into a Kunstler type collapse and living in a small town surrounded by farms in the upper Hudson River valley might be a very good idea. But a home garden will still be a very good idea. For one thing, those phytonutrients which support health begin to degrade immediately after the plants are harvested. A small farm five miles from town which harvests green leaves and loads them on a mule drawn wagon with no refrigeration is NOT delivering the optimum nutrition. Optimum nutrition is delivered by plants harvested and eaten or processed for storage immediately.

    In a total collapse of transportation, calorie dense root crops such as potatoes and sweet potatoes which can be grown in home gardens and stored in root cellars, are likely to become very important.

    I do agree with the critics that driving a pickup load of spinach a hundred miles to a farmer’s market in Manhattan or Madison doesn’t make any sense in a World of Limits.
    Don Stewart

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      The test of any approach is whether it can really be applied in real-world situations, given the resources people actually have available. Also, to what extent it really “works,” for the long term.

      Permaculture seems to me to be an umbrella that goes over a lot of different techniques. Some parts may be more successful than others.

      • Don Stewart says:

        Gail
        Regarding Permaculture as an ‘umbrella’. That is one reason I switched to using the phrases ‘biological gardening’ and ‘biological farming’. My phrases include systems which were invented before the work of Moillison and Holmgren in the 1970s or just invented by someone else such as Masonobu Fukuoka in Japan. I also sometimes use ‘high input’ and ‘low input’ because they are quite useful terms in thinking about a collapse.

        Permaculture was developed by Mollison and Holmgren to be both biological and low input. But, then, they expected collapse to happen in the 1980s, as did Albert Bates. Since oil is still abundant and still cheap (compared to human labor) and the economies of the world continue to stumble along, it isn’t clear that systems that are both ‘biological and low input’ can make any real money in the markets…which leads to articles such as the one in the New York Times. The current crop of biological farmers may be about to experience what the earlier generation did when the world didn’t fall apart in the 1980s. Dedicated Return of the Stone Agers will criticize them for lack of purity, and the markets will bankrupt them for deviation from the mainstream.

        Which is another reason why I think gardening is a good idea. Big gain for low risk.

        Don Stewart

        • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
          Gail Tverberg says:

          I expect oil to be either abundant and cheap relative to human labor or unavailable (with maybe a few year transition period, with some available, but again price won’t be the issue–lack of funds to pay for it will be the issue, or perhaps allocation will be the issue).

          There is a popular mythology that oil will rise in price, and somehow the system will stay together. In this mythology “using less” is the ideal. At least some of permaculture has grown up under the “using less” meme. Unfortunately, the story is just an offshoot of conventional economics, which isn’t right in this case.

          What we need in the long term is systems that function without fossil fuels–in fact, without much wood burning either. Biological systems can do this, but the won’t necessarily produce a huge amount of food for humans.

          • Don Stewart says:

            Gail
            ‘biological systems won’t necessarily produce a lot of food for humans’

            Which is what Toby Hemenway said at Duke several years ago. He opined that Earth can support between 500 million and 2 billion humans with ‘sustainable’ methods.

            I would add that Toby’s numbers are ‘best case’, in that wars and epidemics and bad methods can easily result in far fewer humans.

            Don Stewart

          • Don Stewart says:

            Gail
            In addition to my previous response citing Toby Hemenway.

            I think part of the uncertainty relative to just how much food a biological system can produce arises from the study of isolated individuals and farms. For example, Masonobu Fukuoka produced very high yields on his farm in Japan. But he was an island in a very large sea of industrial agriculture and a larger industrial economy. How much ‘leakage’ from that larger economy benefitted him is hard to quantify. For example, he took interns from all over the world, who certainly got there using transport supported by fossil fuels. He marketed his products into a distribution system which is reliant on fossil fuels.

            John Jeavons in California grows an awful lot of food in a very small space, but he is also embedded in a larger system which is fossil fuel dependent.

            As becomes clear when one reads Kunstler’s novels of a post-collapse future, the problems generated by pervasive theft and violence may be limiting factors. We have made relatively law abiding, peaceful societies which are currently dependent on fossil fuels. So how much a peace-loving biological farmer using few inputs can actually produce may not be the limiting factor.

            I come back to gardening. Anyone who has learned a lot about biological methods with low inputs is likely to be better off than someone abjectly dependent on industrial supply chains.

            Don Stewart

  23. Adam says:

    From “Der Spiegel”:

    Ultimate Reality TV: A Crazy Plan for a Mars Colony

    http://www.spiegel.de/international/world/project-seeks-to-colonize-the-red-planet-a-987080.html

    Extracts:

    If his greatest wish is fulfilled, then Stephan Günther will one day die on Mars. Günther has applied to take part in a unique voyage to our neighboring planet. A return trip is not part of the deal. Conceiving the journey as one-way makes it vastly more feasible and less expensive. A Dutch foundation, led by businessman Bas Lansdorp, is behind the idea.

    Günther has always wanted to fly to the stars, even going so far as to build himself a space capsule out of cardboard boxes as a child. Inside, he carefully drew an instrument panel, cut holes so he could see out and tipped a chair onto its back for the pilot’s seat. “Even when the weather was good,” Günther says. “The other boys would be playing football outside, but I would be flying in my capsule.”

    Endemol (which created “Big Brother”) has already snapped up the broadcasting rights for the candidate selection process. The plan calls for 25 teams of four to then battle it out, with the six best set to begin survival training next year. “We need people who have a lot to lose but want to go anyway.”

    Once the adventurers finally reach their destination, a sedentary life will be forced upon them. Each settler will only have 40 square meters (430 square feet) at his or her disposal. “In Holland, we also hardly go out for half the winter,” says Pamela Nicoletatos of Rotterdam. Ludwig from Bonn has an affinity for everything cosmic and sees himself as an “ambassador of a new world order.” [Oh-oh – it’s starting again – Adam]. Steve from Switzerland insists that he is physically fit enough, noting that he is among the world’s best at “distance water sliding over four hours” — a discipline that is included in the Guinness Book of World Records and which requires a particularly tough backside.

    On the flight to Mars, they will be subjected to cosmic radiation, which can lead to cancer. Space medicine expert Gunga says he is “very skeptical” of the mission. What will the colonists do when the first team member comes down with stomach cancer? “We will likely have to learn to conduct surgery ourselves,” says candidate Günther. [Easy-peasy – just give me a rusty sardine can and a toilet plunger – Adam].

    To Günther, Mars is just an interim stage where humans gain experience. “And then,” he says, “the journey will continue to the depths of interstellar space.”

  24. Ed – I am interested in energy issues.
    edpell says:

    Maybe Ferguson is part of what drives collapse. The system in its desperation squeezes too hard and drives people to active community preservation.

  25. Paul says:

    The reason I don’t think that is because I think that those policies only work if the supply of oil is growing…. which it has been because of shale and tar sands — barely …

    Financial gimmickry can I suppose work for a fair bit of time to offset the increased costs of oil production (for how long nobody knows as we are uncharted waters… surely the toxic side effects will manifest themselves in the near term — not in decades)

    But I don’t think these gimmicks can paper over a declining oil supply — when shale peaks – unless something steps in to fill that hole — I think we are done.

    That seems to be what happened in 08 — conventional oil peaked in 05 — recall the urging to Drill Baby Drill!!! — oil ramped to 147 in 08 — central banks stepped in to back stop things but more importantly they bought time and provided the easy cash that accelerated the fracking boom…

    In effect fracking was the knight in tarnished armor that rode in to save the day and allow us to fight on…

    But when the line turns down on the graph next time — the price will turn upwards quickly — and if there is not knight to ride in at that time …

    Central banks of course cannot print prosperity — what they can do is facilitate the extraction of more oil — but of course there are limits to that as well — if the cost to extract is too high vs the return… then we are done.

    As we know all the men and horses of the king could not put Humpty together again — there are limits to our powers….

  26. Paul says:

    The Men Who Made Us Spend http://www.dailymotion.com/video/x20j885_the-men-who-made-us-spend-episode-1_creation

    Was watching this last night and my takeaway was not so much the consumerism issues and explanations (I was aware of most of that) — rather what was happening to the UK in the 70’s…

    What amused me was that the apparent solution was that all that needed to be done to offset the malaise was to get people to spend… and magically when they did start to spend everything improved… like flicking a light switch…

    No mention of the fact that North Sea Oil is what lead to the turn around in the UK…. no mention of the high price of oil being the cause of people not spending in 1973-74….

    Of course we have learned from what happened in the 70’s… we cannot allow malaise to creep in — we have gone Keynesian on steroids… because governments saw how the people reacted to the end of growth and prosperity in the UK —- they were very angry and they were lashing out at the leaders for not delivering the goods.

    Stimulus as the ‘solution’ to the oil issue continues in hyper-drive of course…. but it is not a solution…

    A good documentary overall but it misses on a few key points.

  27. Pingback: Piekolie nieuwsupdate: week 34 | Stichting Peakoil Nederland

  28. worldofhanuman
    worldofhanuman says:

    from PObarrel:
    ” Watcher says:
    August 20, 2014 at 1:29 pm

    Germany achieved it all with a shadow central bank they created to generate the money needed to build up their military. The Treaty monitors were not configured to count money that didn’t come from the primary government central bank.

    It’s a VERY good question that is usually glossed over by history. There is no way in hell Germany should have been able to fund military build up. They did it off the books through the magic of money creation from thin air out of a semi secret entity secondary central bank.

    Which is why I harp on not paying all that much attention to oil price and oil profits. When you HAVE to have it, you will create the money to get it.”

    So, isn’t this the very essence of the economy anyway? Trasnform natural resources and paint some lipstick over this pig in the end to placate masses and maintain a fasade of balanced accounts, payments. The only parameter which matters then is the timescale or fluction distance between reset/rebalancing points of this scheme and ponzi called human economy. Now arguably 2008 could have been that point and another is due before 2020 or 2040. It’s impossible to predict sadly, it’s quite sickening.

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